Australian Exchange & Taxation!

[kas]

Hi to all Australian on this forum! I have a few questions relating to how we can exchange our dinars? Once it pegs can we exchange them at any major bank or airport? Does anyone know of the taxation implications? Is this viewed by the ATO as capital gain? Should we hold them for 12 months to minimise capital gain, or is it viewed as income? Any ideas welcome!
Thanks Kas

[Rhys925]

ive got the same questions. . . any help would be greatly appreciated

[haydenh]

Hi there,

I have done quite a lot of research into this, and found the ATO website usefull but confusing. Basically my Accountant said that any foreign currency is income. However after talking to him and not being happy with the response, i found in the foreign currency section of the ATO website that foriegn currency that has been held for over 12 months woudl be treated in the same way as a capital gain.

However i woudl recommend that you find the sections on the website and use them as a reference with your own accounant. I am about to leave the office and i will try and find them again if you can't find it yourself.
I am confident that what i found if correct and my accounant is wrong, but i don't want to go back to him until we have something stronger that it will revalue and then go back to him with more figures.

Cheers, and Good Luck,

Hayden

[kas]

Hi Haydenh,
Thanks for your post. I will check out the ATO site also. If you find anything else out please post.
Cheers kas

[kas]

Hi All,
I read where the ANZ bank is part of the Iraq National Bank Consortium (one of thirteen global banks), so hopefully this will be good to exchange when the time comes.
kas

[kas]

Hi all,
I just spoke to the ATO and I was told that any profit from currency is strictly taxed as income. It is not subject to capital gain even if you hold for 12 months. This is not good news
kas

[haydenh]

Hi Kas,
Yeah that's the same feeling taht i had when i first got the news. However their own website does say that Foriegn Currency is a CGT asset for an Individual. HEre is a link to it. USually Foreign Currency is exclused as a CGT asset under businesses, however for an INdividual it is specifically excluded.

http://www.ato.gov.au/individuals/content.asp?doc=/content/36555.htm (http://www.ato.gov.au/individuals/content.asp?doc=/content/36555.htm)

What is a CGT Asset – Individuals Section.
Individuals get 50% discount after 12 months. FOREX not listed in the exempt assets in the following link and therefore does receive discount.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36552.htm&pc=001/002/026/017/002&mnu=&mfp=&st=&cy=1

This is a little confusing as a business does not get the discount, and most accountant only deal in forex gains under a business where all forex gains are included as income. Businesses in Australia do not get the 50% discount for capital gains on assets.
http://www.ato.gov.au/individuals/content.asp?doc=/content/36542.htm&page=1#P88_2685 (http://www.ato.gov.au/individuals/content.asp?doc=/content/36542.htm&page=1#P88_2685)

So although if you were a business, then the ATO is correct. If you own the Currency as an individual then these rules shoudl apply. However there is a whole section on the ATO website that is devoted to Foreign Exchange in relation to Mulitinational companies which in some sections that those rules apply to individuals. So which section overrules the other when they contradict each other i have no idea. This I will pay someone to investigate into when i know thatthere is going to be a tax problem. Not to sound negative, but i am not really keen on running around telling everyone what i am doing until it has made money. Too many people just look at you and say "As If"!

THat's what i have for now. I gotta rush out again sorry i did not put a link to the multinational section. I may be able to do this later.

Hayden

[kas]

Hi haydenh,
Thanks for your post. I will print a copy for my accountant and see what can be done. I agree it is all very confusing!
Cheers
kas

[Rhys925]

too many big words :O

can anyone help me out with this.

I am a 16 year old male student living in Perth W.A., i have a part time Job where i earn under $6 grand a year.

What percentage of my investment profit will i have to pay in taxes, fees etc. I had a look through the ATO website but it didnt really give me an easy answer.

P.S. completely irrelevant but if a lop occured and 3 zeros were taken off the dinar and that meant my 1 mill dinar was actually 1k could i still exchange my 1k dinar for my countries legal tender\currency? or would my dinar then become COMPLETElY worthless.

[GIBBO]

Hello, I am from Bundaberg and have a bit of dinar. When the time comes I am going to setup a Delaware company 'transfer' ownership of my dinar to it and then sell it. 100% tax free.

[haydenh]

Firstly Rhys,

We are all waiting for the actual answers to your questions. I do not think that a zero lop will happen, but if it does theoretically you will be able to cash that in somehow. we will all wait to find that one out. Kas highlighted that ANZ are part of a group of banks operating in Iraq, so hopefully they will exchange. But if it hits the open market i woudl imagine that all banks and airports will be able to do the transfer.

I hope for all of us that it revals high with no zero lop and we are all stuck paying a heap to the tax man, with the remainder to help pay for the massive fuel and housing prices right now.

Now Gibbo,

Firstly i am not an accountant so i can't say what the ATO will actually do. But according to what i have read on the ATO website, transferring of assets is still regarded as a capital gain. The market value will be at the rates that are determeined by the ATO based on those market rates. So even trying to transfer the asset after a revalue will result in a capital gain regardless of the paperwork that you do. Similar to if you were trying to transfer an investment property to someone else, you would still be up for capital gains based on the market value regardless of what you actually put in the contract.

The link that i provided in the other post outlines what is a CGT event, giving away an asset is clearly stated as one of them. There are also various references in the act that the capital gain is based on the market value or sale value whichever is higher. Basically that means you cannot just transfer something worth $1m for $1000. You may have only recieved $1000 but theoretically you will be liable to pay tax based on the asset being worth $1M. I have never done it myself, but that is what i understand this means.

However if I were going to do this, i woudl think that transferring the ownership prior to a reval woudl be the only way to get around this rule. THere is also another problem that i have heard my accounatnt mention before which i have looked into. We may get away with it as our tax system is self asessment, however part 4(a) of the Tax act may catch you out. That basically says that anything that you have done that was purely to avoid paying tax is illegal, and you may be liable to pay the Highest Marginal Tax rate on the whole lot because you tried to avoid it.

We will find out if Kas has any luck getting confirmation of whether the 50% discount applies to this, but if it does, that means we will basically be paying an average tax of 27.5% of the entire gain to the ATO. From what i have heard, the US tax rate is 15% approx. I understand that Delaware does not impose any additional state taxes as other US states do. So really if that is the case then you should save some tax, however i have steered away from this as it does still leave the door open for the ATO to come on in accusing me of entering into arrangements purely for the purpose of tax avoidance. So be careful, and get plenty of advice from someone who does this every day. And if they can out it in writing that it can be done and they will guarantee their work, then i woudl be interested in looking into it. But if the ATO comes along and screws me i woudl want the person giving away the advice to be responsible for it.

As i have hinted already, if this pegs, i am happy to pay the taxes due, i would like to minimise them as much as possible. I think that paying tax is a good problem to have as it means that you have done something right. I personally am not really keen on spending money on doing things that will minimise my taxes further as they all seem to require that i set up those structures and do all the asset transfers prior to any revalue. That could be soon, and i really hope it is before the end of the year.

Good Luck to All.

[spider]

Hi All Good to see some more aussies , we will have a ball when this revalues you watch all these people including banks change there tune , when we want to cash in our millions of dinar , as Hayden said people look at you as if you have got two heads or something . Interesting gibbo like to hear more of your plan , whats a Delaware company .Ray

[gaura]

Hello all Aussie members,

I was born overseas and am now a Australian Citizen and have received my dinar as a gift from some of my family members who are in the US. I was informed by the ato that gifts of cash from overseas are not applicable to income tax and the only tax that I will have to pay is if I invest the cash and then tax will need to be paid on the capital gain. I will call them again and ask the same question, just to make sure that this is correct. If it is correct,then this is good news.

jeff
:)

[spider]

Hey Jeff
What sourght of proof does ATO require to show it was a gift . Would a stat dec be sufficient . Thanks Ray

[gaura]

Hey Jeff
What sourght of proof does ATO require to show it was a gift . Would a stat dec be sufficient . Thanks Ray

I am not sure at this stage, but I will call them sometime soon and ask. I will let you know when I find out exactly

[spider]

Hi Irishman
I am from Lower Blue Mountains how about yourself
Ray

[maxie63]

Anybody happen to see this?:

http://www.prweb.com/releases/2006/9/prweb431709.htm


max